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2.0 Situation Analysis
The hair and nail industry collects total revenue of approximately $50 billion per annum, according to the analysis made as of July 2014. It indicates the annual growth of 2.6% between the years 2009 and 2014 (IBISWorld, 2014). Majority of the businesses thriving in this sector are engaging in the nail, hair, and beauty products. According to a research conducted by Professional Consultants & Resources, exclusively men’s salons are making twice as much revenue as unisex salons.
Furthermore, products and services in the nail care field are growing at four times the rate of the growth in salon business. Currently, SalonCentric is the dominating business in the market (Soble, 2013). Beauty Systems is one of the dominating distributors in the market. Nevertheless, the market is easy to enter as it presents limited/few entry barriers. There seems to be a deficit in private and personalized services, whereas the demand is high among the clients, who no longer want the mall-based chains.
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2.1 Market Summary
An evident challenge relates to competition. The market is characterized by more than 1.2 million businesses (IBISWorld, 2014). It equals to the number of competitors affecting another business in the industry. However, there are certain areas or products that seem to favor some businesses as compared to others. For example, men’s salons are doing twice as good as unisex or ladies salons (Soble, 2013). It would therefore be advisable to invest heavily in this market share. As indicated earlier, clients go away from the mall-based chains. They are currently interested in private and personalized services (Soble, 2013). Unfortunately, there seems to be a deficit of the same.
Consequently, part of the marketing plan for the business should include personalized services. The business owner is therefore advised against setting the business in a mall or what may appear as an area that is ‘too publi’. Clients need to not only see, but also experience private and personalized services. A way of ensuring that the same is being delivered is by carrying out a small research. It can take place among friends and their friends. The latter may not necessarily know the owner of the business. The researcher should inquire into the services they perceive as private and personalized (Baines, Fill, & Page, 2008).
2.2 SWOT Analysis
The business showcases its strength in a well-trained team of employees. A well-trained team includes having qualified personnel that offer high quality services to the clients without compromising the client’s comfort or requests and personalities. If business is set in a location that appears to be private while offering personalized services, it will be additional business strength.
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The business may improve on this by integrating specialization (Pride & Ferrell, 2008). It includes having specific employees to deal with specific services, thus mastering them. Additionally, the employees serving the male clientele should be segregated from those serving the female clientele. It would also be advisable if the business segregated men’s salons from those of women in order to erase unisex perception. The two sections of the business should be given different business names. Through this differentiation strategy, the business will gain maximum revenues. As indicated, men’s salons are making twice what is collected by women’s or unisex salons.
Salon lacks a defined management system. The business owner appears to work out different positions, which might compromise the leadership and management needed in the business. The business owner needs to hire another manager who can carry out the marketing part of the business, while he/she manages internal affairs of the business.
The business has numerous opportunities. It is because it has no limits in the targeted market. Although there are numerous competitors in the market, the number of consumers is growing and they need these services weekly or daily. The company can progress these opportunities by being innovative in styles. It will include experimenting with different types of styles that suit various clients in regard to their personalities, physical appearances, and the type of work/event they have in mind.
The main threats include unstable economic situation affecting consumers’ incomes. The recently experienced recession caused a fall in consumer income. As a result, businesses experienced a decrease in non-essential face care, hair care products, and manicures (IBISWorld, 2014). It can be counteracted by giving discounts on particular services that seem to be in poor demand or creating joint offers for services that are in more or less demand. For instance, a business could offer free haircuts for those customers who need manicure services.
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As mentioned earlier, the business experiences competition from the businesses that are above 1,2 million in number. Each business fashions its strategies towards achieving a competitive advantage. Although a business may create new product lines in order to create a competitive advantage, the business should start by specializing in some particular services (Baines, Fill & Page, 2008). It relates to specializing in some specific services or specific clientele. For instance, the business may begin by targeting male customers. If it has to include female customers, the management should set up a different business for female clients, so that they appear as though they are two distinct businesses. According to the research provided, businesses are embracing chair/suite rentals, which present family-economy chains. They are also moving away from mid-tier value chains, which include independent salons (Soble, 2013). A salon should embrace these changes in order to keep up with the competition as well as formulate strategies that compliment these changes.
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